12 INVESTIGATES: Missing stimulus money?

Published: May. 15, 2013 at 8:51 PM EDT|Updated: May. 15, 2013 at 9:15 PM EDT
Email This Link
Share on Pinterest
Share on LinkedIn
Half a million of your tax dollars was supposed to bring a plant and dozens of new jobs to Richmond's south side. A ground breaking was even held. The mayor was there, but three years later - no business, no jobs. What happened?
Shovel-ready jobs - that's what the U.S. Recovery and Reinvestment Act of 2009 was to bring.
"'Shovel-ready' was not as shovel-ready as we expected," said President Obama in 2011, during a press conference.

Apparently, neither was a stimulus project for Richmond. Cephas Industries was awarded $500,000 in federal stimulus money to develop and operate a multi-million dollar biomass manufacturing and recycling center on Formex Road - a business to convert construction and demolition waste to fuel.

Ground was broken in April of 2010 for what the company dubbed "the region's premier recycling center." On it's web site, they said, "It would create 50 new green jobs, conserve natural resources and sustain the environment."
Mayor Dwight Jones, Congressman Bobby Scott, and City Council members Reva Trammell and Kathy Graziano even posed with hard hats and gold shovels. The mayor wrote about it in his monthly newsletter, calling it an "exciting opportunity for the city."
Three years later, all we found was a padlock, a "for sale" sign, and empty lot. No building.
We tracked the money: The $500,000 started with the federal government; it gave the money to the Virginia Department of Mines, Minerals and Energy; that agency awarded the grant to Cephas Industries.
We uncovered a progress report from last June, where Cephas says it spent $230,000 on a John Deer Excavator and Mack Tractor. Cephas reported to the government that the facility was never built because "the city reneged on a $6 million bond finance deal."
In a statement, the mayor's press secretary says that's not true. Tammy Hawley says the city recommended the company for more stimulus money, but she says it was up to the business to get the financing using recovery act bonds as leverage. In an email, Hawley wrote: "it appears that Cephas was not able to establish his plan as financiable."
Every person we've approached for this story at City Hall, from the mayor to the city council members, has declined to talk about what happened to the facility or the jobs. Congressman Bobby Scott's office never got back to us.
The Department of Mines, Minerals and Energy (DMME) says Cephas ended up leasing a building on Deepwater Terminal Road.
We visited that location several times last winter and never found the company's owner, Morris Cephas. There was no sign outside. The grass was overgrown. The windows were covered in paper.
The company's web site no longer works. Our numerous calls and emails never returned. And our trips to several homes listed for the Cephas' were fruitless.
We went back to the Deepwater Terminal Site one more time and found another company had moved in. Cephas Industries is no longer there. The company's phone number is now disconnected.
$500,000 in your stimulus money and there's no new building or jobs and the leased location is out of business. The DMME was willing to sit down with us.
"It's not the desired outcome," said Al Christopher, director of the Energy Division at DMME.
He was hired to dole out the money for the stimulus projects. The agency handled $109 million. 

RICHMOND, VA (WWBT) - He says they vetted Cephas Industries - it was a 15-year-old company. It had the land and appeared to have the capital to build.

But the project never got off the ground and Cephas eventually rented a building off Deepwater Terminal Road.

"We saw the operation was ongoing, twice in a six-month period. But I can't say what has happened now," said Christopher. "I'm as disappointed as anyone would be that the project didn't have legs and this company wasn't able to stay in business for the long term."

The Department of Mines, Minerals and Energy says with any project, there is risk - but this is the only project the agency says didn't last.

According to documents, $230,000 was used to buy the John Deere excavator and a 2004 Mack tractor. The Department of Mines is currently trying to locate Cephas and determine what's happened to the equipment purchased with your tax dollars.

"The recipient is not supposed to sell any of the property that federal funds are used to procure without permission from this agency and the Federal U.S. Department of Energy. We'll take steps, based on the information we can get from you or anyone, if appropriate, to recover any interests and assets that were purchased with the federal grant money. Any loss is significant in our eyes."